French Court Repeals 75% Income Tax Rate
Dec 30th 2012 2:30PM
Updated Dec 30th 2012 2:38PM
On Saturday, France's Constitutional Court, the Conseil Constitutionnel, issued its decision in striking down, among other things, that the well-publicized 75% income tax bracket sponsored by new French President Francois Hollande.
The case specifically addressed the Finance Act 2013, which aimed to generate 30 billion euros in new revenue through a series of tax increases, mostly aimed at high earners.
In its decision, the court found France's new 45% marginal tax bracket constitutional in theory but criticized some of its effects in practice. In particular, the court noted that the 75% tax, as written, was applied unfairly to tax households with a single high-earning head of household more heavily than a household with two individuals earning nearly as much.
The court also noted that as applied to certain pensioners, the law had the effect of creating a 75.04% tax burden in 2012, and a 75.34% tax rate in 2013. The court declared these rates an "excessive burden" on these taxpayers and "contrary to equality." The court ordered that the maximum marginal tax rate on pensioners not exceed 68.34%. The court also rejected increasing the tax rate on certain bonds to 90.5%, and reduced the maximum tax rate on employee stock options and share grants to 64.5%.
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